Spring Statement 2024: Key Takeaways

In yesterday’s Spring Statement, likely the last major fiscal event before the impending general election, all eyes were on the potential introduction of voter-friendly measures.

It was good news for personal income but slim pickings for businesses. While there were no significant surprises, one noteworthy policy change was the abolishment of the "non-dom" regime. With elections this year, the focus for the Chancellor was on alleviating the personal tax burden which included a 2p reduction in National Insurance contributions.

Here are some of our key takeaways:

Full Expensing extended to leased assets

• ?The Chancellor announced he will publish draft legislation for full expensing to apply to leased assets

Toby Ryland, Corporate Tax Partner, comments:

“Full Expensing is a straightforward and easy tax relief that has made the decision to invest in new equipment much easier. However, it did not extend to leased assets, but the chancellor has announced that this will change. This will clearly be welcomed by business owners.

“Let’s hope that the rules for leased assets are kept as simple as those for owned assets.”

Further 2p cuts made to National Insurance from April 2024

• The 10% National Insurance rate will fall to 8% for employees - saving those who receive an average salary of ￡35,000 a further ￡448.60 a year
• There will also be tax cuts for the self-employed. The government will reduce the class 4 self-employed NICs rate from 9% to 6%

Sam Dewes, Private Client Partner, comments:

"A reduction to the main rate of National Insurance (NI) by 2% represents a tax cut of ￡448.60 next year for a worker earning ￡35,000.? Under current thresholds, any benefits of a 2% NI cut will be capped at ￡754 per year for workers above ￡50,270 unless adjustments are made to the upper NI rate.

“However, while some workers may experience reduced NI contributions, the broader tax framework is poised to continue exerting significant pressure on taxpayers, and many will end up paying an increased tax rate overall by being pushed into higher tax brackets."

Scrapping of the "non-dom" regime

• Abolishment of "non-dom" status which will raise ￡2.7bn a year
• New arrivals to the UK will not have to pay tax on foreign income and gains for the first four years of their UK residency from April 2025

Sam Dewes, Tax Partner at HW Fisher, adds:

“The Chancellor has announced that the “non-dom” regime will be abolished. His plan is to allow overseas individuals to come to the UK and not pay tax on their overseas income and gains for 4 years. After that they will be taxed in the same way as other UK residents”.

“This is a very significant change to a long-standing regime that was designed to entice overseas wealth to the UK. The key proposed change that will attract inward investment to the UK is that the existing rules restricting “non-doms” from bringing their untaxed overseas income and gains has been removed. However, it remains to be seen whether 4 years is enough of a grace period to encourage high net worth individuals to the UK, particularly for those who want to come to the UK for their children’s schooling. The other big unknown is how many of the existing “non-doms” will look to leave the UK as a result of these changes. As part of abolishing the non-dom regime, the Chancellor has proposed a consultation on moving to a residence-based inheritance tax regime”.

“We await further information about how these rules, - ?which are some of the most complicated parts of the UK tax code - will be implemented in practice.”

Other measures include:

• Multiple Dwellings Relief will be scrapped from June 2024
• Furnished Holiday Lettings relief will be abolished from April 2024
• Higher Capital Gains tax rate on residential property will be reduced from 28% to 24% in April 2024
• An introduction of a British ISA, allowing an extra ￡5,000 investment in the UK
• 5p cut to fuel duty to continue for a further 12 months
• Freeze on alcohol duty extended until February 2025
• Increase in the VAT registration threshold from ￡85k to ￡90k

Please do not hesitate to get in touch if you would like to find out more.